We accept most taxpayers' returns as filed. If we inquire about
your return or select it for examination, it does not suggest that you are
dishonest. The inquiry or examination may or may not result in more tax. We may
close your case without change; or, you may receive a refund.

The process of selecting a return for examination usually begins
in one of two ways. First, we use computer programs to identify returns that may
have incorrect amounts. These programs may be based on information returns, such
as Forms 1099 and W-2, on studies of past examinations, or on certain issues
identified by compliance projects. Second, we use information from outside
sources that indicates that a return may have incorrect amounts. These sources
may include newspapers, public records, and individuals. If we determine that
the information is accurate and reliable, we may use it to select a return for
examination.

Publication 556, Examination of Returns, Appeal Rights, and Claims
for Refund, explains the rules and procedures that we follow in examinations.
The following sections give an overview of how we conduct examinations.

We handle many examinations and inquiries by mail. We will send
you a letter with either a request for more information or a reason why we
believe a change to your return may be needed. You can respond by mail or you
can request a personal interview with an examiner. If you mail us the requested
information or provide an explanation, we may or may not agree with you, and we
will explain the reasons for any changes. Please do not hesitate to write to us
about anything you do not understand.

If we notify you that we will conduct your examination through
a personal interview, or you request such an interview, you have the right to
ask that the examination take place at a reasonable time and place that is
convenient for both you and the IRS. If our examiner proposes any changes to
your return, he or she will explain the reasons for the changes. If you do not
agree with these changes, you can meet with the examiner's supervisor.

If we examined your return for the same items in either of the
2 previous years and proposed no change to your tax liability, please contact us
as soon as possible so we can see if we should discontinue the examination.

If you do not agree with the examiner's proposed changes, you
can appeal them to the Appeals Office of the IRS. Most differences can be
settled without expensive and time-consuming court trials. Your appeal rights
are explained in detail in both Publication 5, Your Appeal Rights and How To
Prepare a Protest If You Don't Agree, and Publication 556, Examination of
Returns, Appeal Rights, and Claims for Refund.

If you do not wish to use the Appeals Office or disagree with
its findings, you may be able to take your case to the U.S. Tax Court, U.S.
Court of Federal Claims, or the U.S. District Court where you live. If you take
your case to court, the IRS will have the burden of proving certain facts if you
kept adequate records to show your tax liability, cooperated with the IRS, and
meet certain other conditions. If the court agrees with you on most issues in
your case and finds that our position was largely unjustified, you may be able
to recover some of your administrative and litigation costs. You will not be
eligible to recover these costs unless you tried to resolve your case
administratively, including going through the appeals system, and you gave us
the information necessary to resolve the case.

What to do when you owe taxes. It describes what to do if
you get a tax bill and what to do if you think your bill is wrong. It also
covers making installment payments, delaying collection action, and submitting
an offer in compromise.

IRS collection actions. It covers liens, releasing a lien,
levies, releasing a levy, seizures and sales, and release of property.

Generally, both you and your spouse are responsible, jointly
and individually, for paying the full amount of any tax, interest, or penalties
due on your joint return. To seek relief from any liability related to your
spouse (or former spouse), you must file a claim on Form 8857, Request for
Innocent Spouse Relief. Form 8857 generally must be filed within 2 years from
the IRS's first attempt to collect the tax from you after July 22, 1998, such as
by applying your refund from one year to the joint liability. For more
information, see Publication 971, Innocent Spouse Relief, Form 8857, and the
Instructions for Form 8857.

You can file a claim for refund if you think you paid too much
tax. You must generally file the claim within 3 years from the date you filed
your original return or 2 years from the date you paid the tax, whichever is
later. The law generally provides for interest on your refund if it is not paid
within 45 days of the date you filed your return or claim for refund.
Publication 556, Examination of Returns, Appeal Rights, and Claims for Refund,
has more information on refunds.

If you were due a refund but you did not file a return, you must
file within 3 years from the date the return was due (including extensions) to
get that refund.